UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _____________________

Commission File Number: 001-39397

INOZYME PHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware	38-4024528
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
321 Summer Street, Suite 400 Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (857) 330-4340

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	INZY	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 7, 2022, the registrant had 40,394,363 shares of common stock, $0.0001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” and the negative version of these words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described in the “Risk Factors” section in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q and include, among other things:

•our ongoing Phase 1/2 clinical trials of INZ-701 for ENPP1 and ABCC6 Deficiencies, including statements regarding the timing of enrollment and completion of the clinical trials and the period during which the results of the clinical trials will become available;

•the timing and conduct of our planned later stage clinical trials of INZ-701 for patients with ENPP1 and ABCC6 Deficiencies;

•our plans to conduct research and preclinical testing of INZ-701 for additional indications;

•our plans to conduct research and preclinical testing of other product candidates;

•the timing of, and our ability to obtain and maintain, marketing approvals of INZ-701, and the ability of INZ-701 and our other product candidates to meet existing or future regulatory standards;

•our expectations regarding our ability to fund our operating expenses, capital expenditures, and debt service obligations with our cash, cash equivalents and short-term investments;

•the potential advantages of our product candidates;

•the rate and degree of market acceptance and clinical utility of our product candidates;

•our estimates regarding the potential market opportunity for our product candidates;

•our commercialization and manufacturing capabilities and strategy;

•our intellectual property position;

•the impact of COVID-19 on our business and operations;

•our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•the impact of government laws and regulations;

•our competitive position; and

•our expectations regarding the time during which we will be an emerging growth company under the Jumpstart our Business Startups Act of 2012.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

i

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	31
Signatures		32

ii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	44,044		$	23,316
Short-term investments		97,408			88,485
Prepaid expenses and other current assets		4,474			3,541
Total current assets		145,926			115,342
Property and equipment, net		2,197			2,383
Other assets		354			354
Right-of-use assets		1,734			2,053
Prepaid expenses, net of current portion		3,810			3,409
Total assets	$	154,021		$	123,541
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,391		$	2,394
Accrued expenses		10,948			8,508
Operating lease liabilities		794			731
Total current liabilities		13,133			11,633
Operating lease liabilities, net of current portion		2,035			2,640
Long term debt, net		4,073			—
Total liabilities		19,241			14,273
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred Stock, $0.0001 par value – 5,000,000 shares authorized at September 30, 2022 and December 31, 2021; No shares issued and outstanding at September 30, 2022 or December 31, 2021		—			—
Common Stock, $0.0001 par value – 200,000,000 shares authorized at September 30, 2022 and December 31, 2021; 40,394,363 shares issued and outstanding at September 30, 2022 and 23,668,747 shares issued and outstanding at December 31, 2021		4			2
Additional paid in-capital		331,470			256,948
Accumulated other comprehensive (loss) income		(477	)		18
Accumulated deficit		(196,217	)		(147,700	)
Total stockholders’ equity		134,780			109,268
Total liabilities and stockholders’ equity	$	154,021		$	123,541

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	12,191		$	9,346		$	34,012		$	24,169
General and administrative		4,721			4,916			15,130			13,720
Total operating expenses		16,912			14,262			49,142			37,889
Loss from operations		(16,912	)		(14,262	)		(49,142	)		(37,889	)
Other income (expense):
Interest income		737			47			1,118			168
Other expenses		(197	)		(65	)		(493	)		(149	)
Other income, net		540			(18	)		625			19
Net loss	$	(16,372	)	$	(14,280	)	$	(48,517	)	$	(37,870	)
Other comprehensive (loss) income:
Unrealized (losses) gains on available-for-sale securities		(60	)		(6	)		(417	)		10
Foreign currency translation adjustment		(20	)		(9	)		(78	)		(9	)
Total other comprehensive (loss) income		(80	)		(15	)		(495	)		1
Comprehensive loss	$	(16,452	)	$	(14,295	)	$	(49,012	)	$	(37,869	)
Net loss attributable to common stockholders—basic    and diluted	$	(16,372	)	$	(14,280	)	$	(48,517	)	$	(37,870	)
Net loss per share attributable to common    stockholders—basic and diluted	$	(0.38	)	$	(0.60	)	$	(1.36	)	$	(1.61	)
Weighted-average common shares and pre-funded warrants outstanding—basic    and diluted		43,657,718			23,643,494			35,755,695			23,521,981

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

INOZYME PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(amounts in thousands, except share data)

(Unaudited)

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Capital		Income (Loss)			Deficit
Balance at December 31, 2021		23,668,747	$	2	$	256,948	$	18		$	(147,700	)	$	109,268
Stock-based compensation		—		—		1,752		—			—			1,752
Exercise of stock options		149,664		—		240		—			—			240
Comprehensive loss:
Unrealized loss on investments		—		—		—		(132	)		—			(132	)
Foreign currency translation adjustment		—		—		—		(15	)		—			(15	)
Net loss		—		—		—		—			(16,884	)		(16,884	)
Balance at March 31, 2022		23,818,411	$	2	$	258,940	$	(129	)	$	(164,584	)	$	94,229
Stock-based compensation		—		—		2,185		—			—			2,185
Exercise of stock options		1,678		—		4		—			—			4
Issuance of common stock, net of issuance costs		16,276,987		2		56,135		—			—			56,137
Issuance of pre-funded warrants, net of issuance costs		—		—		12,150		—			—			12,150
Comprehensive loss:
Unrealized loss on investments		—		—		—		(225	)		—			(225	)
Foreign currency translation adjustment		—		—		—		(43	)		—			(43	)
Net loss		—		—		—		—			(15,261	)		(15,261	)
Balance at June 30, 2022		40,097,076	$	4	$	329,414	$	(397	)	$	(179,845	)	$	149,176
Stock-based compensation		—		—		1,849		—			—			1,849
Exercise of stock options		59,635		—		115		—			—			115
Exercise of pre-funded warrants		197,240		—		—		—			—			—
Shares purchased in Employee Stock Purchase Plan		40,412		—		92		—			—			92
Comprehensive loss:
Unrealized loss on investments		—		—		—		(60	)		—			(60	)
Foreign currency translation adjustment		—		—		—		(20	)		—			(20	)
Net loss		—		—		—		—			(16,372	)		(16,372	)
Balance at September 30, 2022		40,394,363	$	4	$	331,470	$	(477	)	$	(196,217	)	$	134,780
Balance at December 31, 2020		23,384,969	$	2	$	249,175	$	2		$	(91,076	)	$	158,103
Stock-based compensation		—		—		1,577		—			—			1,577
Exercise of stock options		88,734		—		249		—			—			249
Comprehensive income:
Unrealized gain on investments		—		—		—		10			—			10
Net loss		—		—		—		—			(11,050	)		(11,050	)
Balance at March 31, 2021		23,473,703	$	2	$	251,001	$	12		$	(102,126	)	$	148,889
Stock-based compensation		—		—		1,813		—			—			1,813
Exercise of stock options		96,890		—		106		—			—			106
Comprehensive income:
Unrealized gain on investments		—		—		—		6			—			6
Net loss		—		—		—		—			(12,540	)		(12,540	)
Balance at June 30, 2021		23,570,593	$	2	$	252,920	$	18		$	(114,666	)	$	138,274
Stock-based compensation		—		—		1,752		—			—			1,752
Exercise of stock options		94,154		—		243		—			—			243
Comprehensive income:
Unrealized loss on investments		—		—		—		(6